4. Recall inequality aversion model to explain social preference: There are two players, A & B. They decide how to divide $100 between two. Player A first proposes a distribution of ($xa, $xa) with x420, XB20, and x4+ xp= 100, and then Player B decides whether to accept it. Players' payoff functions are given as follows: For player i, u;(T;, x=i) = x; – max{x_i – L;, 0} – a max{x; – x_i,0} where x. represents the opponent of the player i, a is a parameter and max{C, D} with numbers C, & D is an operator to pick up the greater value between Cand D. IM10]: When player A offers ($20, $80), answer his payoff. IM11]: When player A offers ($20, $80) and a = 2/3, answer Player B's payoff.

4. Recall inequality aversion model to explain social preference: There are two players, A & B. They decide how to divide $100 between two. Player A first proposes a distribution of ($xa, $xa) with x420, XB20, and x4+ xp= 100, and then Player B decides whether to accept it. Players' payoff functions are given as follows: For player i, u;(T;, x=i) = x; – max{x_i – L;, 0} – a max{x; – x_i,0} where x. represents the opponent of the player i, a is a parameter and max{C, D} with numbers C, & D is an operator to pick up the greater value between Cand D. IM10]: When player A offers ($20, $80), answer his payoff. IM11]: When player A offers ($20, $80) and a = 2/3, answer Player B's payoff.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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